BOA facing mortgage probe

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The FHA 203k loan program provides home buyers the opportunity to buy and fix up a property, without exhausting their personal savings.

Bank of America is facing a federal probe into its participation in a government housing program.

The U.S. Attorney’s Office is investigating the lender’s compliance with the requirements of the Federal Housing Administration’s Direct Endorsement Program, according to a Reuters report. The program allows mortgage lenders to approve loans that are then insured by the federal government without further review. If it’s later determined that the lender didn’t follow FHA underwriting standards, however, the government can demand reimbursement for any losses.

Several other banks have previously been tagged for violating program rules. In 2012, Citigroup agreed to pay $158.3 million over violations, while Deutsche Bank settled for $202.3 million. Another case, against Wells Fargo, is pending, Reuters reported.

In 2012, Bank of America agreed to pay the federal government $1bn over claims that its Countrywide unit gave FHA-insured loans to unqualified borrowers, according to Reuters. However, that settlement only covered loans made prior to April 30, 2009.

Bank of America has also raised its estimate of its overall litigation costs, according to Reuters. The bank now estimates it may see litigation costs as high as $6.1bn, up from $5.1bn at the end of the third quarter.

COMMENTS

by John O.| 2/27/2014 11:20:24 PM

They need to include jail time for all responsible parties in defrauding the government. This the missing piece is as this company is full of corruption.